At Toroso, we have been keeping meticulous track of the ETF industry for just over six years. The ETF industry assets have been increasing at about a 20% rate for the past 10 years. In 2018, growth has been more volatile, particularly in the past six months. Some issuers have suffered from this plateau of growth more than others. In fact, in the past 12 months, the open-to-close ratio of ETFs is at 1.55, but in the last 6 months it is under one (more closures than launches). Now this pruning of the ETF tree can optimistically be a positive thing because ineffective ETFs can be substituted by more promising ETFs in the future. In order to get a glimpse of how issuers have performed with 2018’s more volatile market than the last few years, here is a review of the top 10 issuers from the past 6 months.
The first standout is Invesco’s increase, which is chiefly due to their acquisition of previous #8 on this list, Guggenheim, a few months ago. Ironically, the stock Invesco (IVZ) has suffered through the acquisition but it appears that Invesco may have acquired a unique intangible asset in that Guggenhiem had leveraged and inverse exemptive relief. Secondly, WisdomTree, our ETF March Madness Bracket winner, has lagged in the past 6 months compared to their top 10 peers, but they have increased their international assets by over $20 billion through multiple acquisitions. Lastly, Schwab and First Trust have had strong performances in the past 6 months. The largest flows are still focused on “client alignment growth factors” like low cost beta. Companies like Blackrock, Charles Schwab, and State Street continue to acquire low fee assets while maintaining margins and revenue growth.
Since February 19th, the top 7 issuers have stayed in the same order, but you can see the slight shifting around they have done, whether good or bad in relation to the 3.05% AUM growth the ETF industry has had since then. To track this growth, as always, we suggest using the TETF.index, which aims to track the asset growth of the publicly trade ETF ecosystem.
